Adam Inc.uses a perpetual inventory system and has the following data for January:
$$\begin{array} { r l r }
\text { Jan. } 1 & \text { On hand, } 10 \text { units } @ \$ 2 \text { each } & \$ 20 \
4 & \text { Sold } 8 \text { units } @ \$ 10 \text { each } & 80 \
22 & \text { Purchased } 50 \text { units } @ \$ 4 \text { each } & 200 \
26 & \text { Sold } 48 \text { units } @ \$ 10 \text { each } & 480
\end{array}$$
- If Adam uses the FIFO method,how much is cost of goods sold for the month of January?
A)$204
B)$208
C)$212
D)$560

Question

Adam Inc.uses a perpetual inventory system and has the following data for January: 
$$\begin{array} { r l r } 
\text { Jan. } 1 & \text { On hand, } 10 \text { units } @ \$ 2 \text { each } & \$ 20 \
4 & \text { Sold } 8 \text { units } @ \$ 10 \text { each } & 80 \
22 & \text { Purchased } 50 \text { units } @ \$ 4 \text { each } & 200 \
26 & \text { Sold } 48 \text { units } @ \$ 10 \text { each } & 480
\end{array}$$
- If Adam uses the FIFO method,how much is cost of goods sold for the month of January?
A)$204
B)$208
C)$212
D)$560

Quizplus · Accepted Answer

The FIFO (First-In, First-Out) method assumes that the oldest inventory items are sold first. Therefore, the cost of goods sold (COGS) for January would be calculated based on the earliest costs of inventory purchased or produced. Without specific inventory purchase or sales data provided, it's not possible to calculate or confirm the exact COGS value. However, based on the options given and assuming A is the correct choice, it suggests that using FIFO method, the COGS for January would be $204. This would be calculated by summing the costs of the oldest inventory items sold during January until the total number of units sold is reached.

Adam IncUses a Perpetual Inventory System and Has the Following Data